Changes to your benefits (welfare reform)

The government is making (and has already made) big changes to working-age benefits since 2013. Changes such asthe “Bedroom Tax”- reducing Housing Benefit for working age tenants with ‘extra’ bedrooms, and Universal Credit – where all payments, including those to cover your rent, are made monthly directly to you.
Some of these changes might make it more difficult for you to pay your rent. Remember - your rent is your responsibility, but Jigsaw Group is here to help if you are having money worries.
We can also help you with mutual exchanges, transfers, or applications for Discretionary Housing Payments.
Contact us on: 0300 111 1212

The “Bedroom Tax” is the name given to benefit changes introduced in 2013 for social housing residents, which mean that the amount of Housing Benefit or Universal Credit you get might be reduced if you have more bedrooms than the government deems necessary.

If you (or you and your partner) are Pension Credit age and receiving Housing Benefit to help you pay your rent, then you will not be affected by the Bedroom Tax.

Your Housing Benefit, or the help included in your Universal Credit to help you pay your rent, will be reduced by an amount equal to 14% of your rent if you are regarded as having one ‘extra’ bedroom; or by 25% of your rent if you have two or more ‘extra’ bedrooms.

The bedroom tax doesn’t affect everybody. You won’t need to pay any more rent for having ‘too many’ bedrooms:

If you (or you and your husband, wife or partner) are Pension Credit age or over and receiving Housing Benefit

If you live in a ‘shared ownership’ property

If you have been placed in a certain type of ‘temporary accommodation’

If you live in a particular type of supported housing called ‘exempt accommodation’ – ask us if you’re not sure

If your Housing Benefit has already been reduced because of a Rent Officer referral

The basic rules are that one bedroom is allowed for each of the following:

A couple

A single adult

A child over the age of 16

2 children of the same sex under the age of 16

2 children of either sex under the age of 10

The number of bedrooms a household needs can be increased in certain circumstances. The rules in this area are complicated but include the following groups:

Disabled adults who need overnight care

Households with disabled children who cannot share a bedroom because of their disability

Foster carers

Households with adult children in the armed forces who are away from home for University

Once your local council/the DWP have worked out how many bedrooms you are deemed to need using the above rules, they will regard any bedroom you have above this as ‘extra’. This is regardless of its size, or what it is used for, and so will mean you receive less Housing Benefit or Universal Credit and you will have to make up the difference.

*See the Frequently Asked Questions for ideas on challenging the local council’s / DWP’s decisions.

What can I do?

If your Housing Benefit or Universal Credit is being reduced by the Bedroom Tax:

First check that a Bedroom Tax deduction should apply to you. If you don’t think it should (maybe the local council / DWP have the number of children wrong, or don’t know about your overnight carer) then contact them immediately, and let us know – we may be able to help.

If the Bedroom Tax is being applied correctly and you are getting Housing Benefit, you need to pay the difference in your rent, otherwise you could lose your home. If you are struggling to pay your rent contact us immediately.

If the Bedroom Tax is being applied correctly and the Universal Credit you get each month includes help with your rent, this will not cover all the rent that is due so contact us to find out how much you have to pay. If you are struggling to pay your rent contact us immediately.

If the Bedroom Tax is being applied correctly and the DWP pay part of your Universal Credit to us, towards your rent, this will not cover all the rent that is due so contact us to find out how much you have to pay. If you are struggling to pay your rent contact us immediately.

If you are having real difficulties paying your rent then you might be able to get a Discretionary Housing Payment- but the council’s budget is limited so you will need to explain your particular difficulties and provide a financial statement showing that you cannot afford the rent that is due. See the section on Discretionary Housing Payments for more information.

Even if the Bedroom Tax should apply to you according to the government’s rules, you might be able to argue successfully to an appeal tribunal that the rules are not being interpreted correctly in your case. Contact us for more information.

The Benefit Cap

What is “the Benefit Cap”?
The Benefit Cap limits the overall amount of welfare benefits a ‘working age’ household can receive. It does not affect you if:

you or your partner (and in some circumstances a dependent child) are getting certain benefits, or

you (or your partner) are Pension Credit age – unless you are getting Universal Credit, Income Based JSA or Income Support or Income Related ESA.

Here’s some information on the Benefit Cap, firstly for people on Housing Benefit, then for those on Universal Credit.

Benefit Cap for people on Housing Benefit

Who won’t be affected by the Cap?

The Benefit Cap does not apply to you if:

You or your partner are Pension Credit Age (unless you are getting Universal Credit, Income Based JSA or Income Support or Income Related ESA)

You or your partner have claimed and are entitled to claim, Working Tax Credit

You, your partner, or a child or young person for whom you get Child Benefit, gets Disability Living Allowance, Personal Independence Payment or Armed Forces Independent Payment.

You or your partner are in the ‘support group’ of Employment Support Allowance

You or your partner receive (or have an underlying entitlement to) Carer’s Allowance

You or your partner receive Guardian’s Allowance

You or your partner get Industrial Injuries Disablement Benefit.

You or your partner get a War Disablement Pension, Armed Forces Compensation Scheme payment, or a War Widows’/Widowers’ Pension.

You (or you and your partner) are out of work but had been in work for at least 50 out of the 52 weeks before – this “grace period” lasts 9 months.

How to work out if the Cap applies to you

If you are of working age and not getting one of the benefits/in one of the situations that would exclude you from the Benefit Cap then the DWP will add together most of the benefits you are entitled to (including Child Benefit).

They will then compare this to the Benefit Cap limit that applies to you:

£384.62 per week for single parents.

£384.62 per week for couples with or without children.

£257.69 per week for single people without children.

If your total welfare is above this Cap limit you will be affected by the Benefit Cap.

When you add the benefits together do not include: Council Tax Support, Statutory Sick Pay, Statutory Maternity Pay, Bereavement Support Payment, Discretionary Housing Payments and Housing Benefit paid on ‘specified accommodation’ (i.e. certain supported housing – ask us if you’re not sure if this applies to you).

If the total amount of the benefits you (and your partner) are entitled to comes to more than the Benefit Cap limit your Housing Benefit payments will be reduced. If this would mean losing all your Housing Benefit, you still have to be given 50p a week. This means that you can still try for a Discretionary Housing Payment.

It is only your Housing Benefit that can be reduced due to the Cap – although 50p a week must be left in payment. But if you receive Universal Credit then the whole of your Universal Credit award can be reduced due to the cap.

Benefit Cap for people on Universal Credit

Who won’t be affected by the Cap?

The Benefit Cap does not apply to you:

In any months in which you or your partner have earned income of £520 or more.

If you, your partner, or a child or young person for whom you get Child Benefit, gets Disability Living Allowance, Personal Independence Payment or Armed Forces Independent Payment.

If you or your partner are regarded as “having a limited capability for work-related activity”.

If you or your partner get Industrial Injuries Disablement Benefit.

If you or your partner get a War Disablement Pension, Armed Forces Compensation Scheme payment, or a War Widows’/Widowers’ Pension.

If you are entitled to Carer’s Allowance or a Carer Element in your Universal Credit award

If you get Guardian’s Allowance

If you (or you and your partner) are out of work but had been in work continuously for over 12 months before losing the job and you or your partner (or if you were both working, between the two of you) have earned at least £430 net or more in each of these monthly assessment periods which started before 1stApril 2017 or had earned income of £520 or more in any monthly assessment periods which started on or after 1st April 2017 onwards – you will be protected for a “grace period” of 9 months.

How do you work out if the Cap applies?

If you are of working age and not getting one of the benefits / in one of the situations that would exclude you from the Benefit Cap then the DWP will add together most of the benefits you are entitled to (including Child Benefit).

They will then compare this to the Benefit Cap limit that applies to you:

£1666.67 per month for single parents.

£1666.67 per month for couples with or without children.

£1116.67 per month for single people without children.

If your total welfare is above this Cap limit you will be affected by the Benefit Cap.

When you add the benefits together do not include: any Child Care Cost Element of the Universal Credit award, Council Tax Support, Statutory Sick Pay, Statutory Maternity Pay, Bereavement Support Payment, Discretionary Housing Payments and Housing Benefit paid on ‘specified accommodation’ (i.e. certain supported housing – ask us of you’re not sure if this applies to you).

If the total amount of the benefits you (and your partner) are entitled to is more than the Benefit Cap limit that applies in any monthly assessment period, then your Universal Credit payments will be reduced for that month. If you are struggling to pay your rent because of the Cap then you might be able to get a Discretionary Housing Payment to help you. Contact us for advice.

Find out more – take a look at our benefit cap FAQs.

Are you receiving all the benefits you are entitled to?

Use our budget calculator to find out. If you need any more information, call our Money Advice team on 0300 111 1212.

Discretionary Housing Payment

What is a Discretionary Housing Payment (DHP)?
Every year the government gives local councils a pot of money to make Discretionary Housing Payments to help people who qualify for Housing Benefit (or the housing costs element of Universal Credit) who are having trouble with:

paying their rent, or

finding enough money to pay for the start-up costs of a tenancy, such as rent deposits and removal costs.

Many people have a shortfall between the Housing Benefit they get and the rent they have to pay.

If you are struggling to meet this shortfall then you can apply to their local council for a Discretionary Housing Payment. This includes where you have been affected by the Bedroom Tax and Benefit Cap.

You can also ask for a Discretionary Housing Payment if you are on Universal Credit and struggling to pay your rent.

Discretionary Housing Payments are awarded at the discretion of the local council – they are not an entitlement in the way that many other benefits are. And there is not a clear set of rules to help the local council decide whether or not they’ll give a payment – so an application can be refused.

Discretionary Housing Payments that are given to help with your ongoing rent are usually awarded for a limited amount of time – 13 or 26 weeks – so they are not a long-term answer. But you can re-apply at the end of that period.

If you make a claim for a Discretionary Housing Payment you need to explain your personal circumstances in as much detail as possible explaining why you need the extra help and for how long you are likely to require it. It’s a good idea to include a “financial statement” showing your income and outgoings. You are more likely to get a payment if you will not need it for very long.

If you make a claim for a Discretionary Housing Payment you must continue to pay your full rent until you have been told the outcome of your claim – otherwise arrears will build up on your rent account.

If a claim for a Discretionary Housing Payment is refused, that decision is not appealable to an independent Tribunal but you can request an internal review of the decision – write to your local council explaining why you disagree with their decision.

There is no time limit for making a claim for a Discretionary Housing Payment, so you can ask your local council for a Discretionary Housing Payment that covers a period in the past when you were entitled to some Housing Benefit or Universal Credit – which can help reduce any rent arrears on your rent account.

Our MoneyWise team is on hand if you need assistance or advice with applying for a DHP.

Non-dependent deductions

What are non-dependent deductions?

Non-dependants are normally classed as anyone living with you aged 18 or over, or 21 if you are on Universal Credit.

The Government makes the assumption that these adults will contribute towards your household costs, including rent and Council Tax. They can therefore deduct a sum of money from your Housing Benefit or Universal Credit and Council Tax Support award, which is called a non-dependant deduction.

These deductions are generally based on the income the non-dependant receives and are applied regardless of whether or not they do actually give you any money for food, rent, electricity etc.

This person may, however, be classed as a lodger if they are not a close relative and they pay you on a formal basis to live in your home. Having a lodger will affect your Housing Benefit or Universal Credit payments differently.

The non-dependant deduction rules are complicated and the wrong deduction can sometimes be taken – making a big difference to your Housing Benefit or Universal Credit and Council Tax Support award.

The rules are also different depending on whether you are claiming Universal Credit or Housing Benefit. With Housing Benefit, the deductions are calculated based on earnings of the non-dependent, whereas with Universal Credit, the deductions are referred to as ‘housing costs contributions’ and a flat rate of £70.06 a month per non-dependent will be taken from your Universal Credit award.

There are some circumstances in which no deduction will be taken such as:

If you or your partner are registered blind or getting the care component of Disability Living Allowance, the daily living component of Personal Independence Payments, Attendance allowance, or Armed Forces Independence Payment

If the non-dependent is only staying with you temporarily

If they are under 25 and on Income Based Job Seeker’s Allowance

Under 25 and on Income Support

On Pension Credit

On Carer’s Allowance

A prisoner, whether on remand or sentenced

In the armed forces and away on operations

Contact your local council or DWP if you have a non-dependent living with you to ensure that you are not being over-billed. Our MoneyWise team is also on hand to help if you need further assistance.

Pension Credit

What is Pension Credit?
Did you know that around a third of people who are entitled to Pension Credit do not claim it? You could be missing out on extra money, so read on to find out more.

There are two types of Pension Credit: Guarantee Pension Credit and Savings Pension Credit. Some people get one or the other and some people can get both.

Guarantee Pension Credit

Guarantee Pension Credit is a benefit which people of Pension Credit Age can claim; it tops up your income to a minimum level. It is much more generous than the working age means-tested benefits. Even if you are only entitled to a small amount, the good news is that you automatically qualify for maximum help with your rent too! The Pension Credit age varies depending on your gender and date of birth. Visit https://www.gov.uk/calculate-state-pension to check whether you are eligible.

What if my partner has reached Pension Credit age but I haven’t?

If you are a couple and one of you has reached Pension Credit age, you can make a claim for Pension Credit. But this is something that will change in the future – ‘mixed age couples’ will have to claim Universal Credit instead, which is much less generous. So it is worth checking if you could be entitled, and claim Pension Credit now; if you do get Pension Credit you can stay on it for as long as you remain entitled to it and will not have to change to Universal Credit.

How much could I get?

Guarantee Pension Credit tops up your income to a certain level. The amount you could get depends on whether you are single or a couple and whether you have certain circumstances that mean you need more money to live on. Because it is a top-up benefit, the amount you can get also depends on the amount and type of other income you receive and the level of any savings you have above £10,000.

How do I make a claim?

The easiest way to make a claim is by ringing the Pension Credit claim line on 0800 99 1234.

Savings Pension Credit

Savings Pension Credit is for people aged 65 and over. It provides extra money to some people who have made some additional provision for their retirement, e.g. private or works pensions.

Changes introduced in April 2016 mean that those who reached State Pension age on or after 6 April 2016 are not eligible to make a new claim for Savings Pension Credit.

People who were already getting their State Pension, or who reached State Pension age before 6 April 2016, can still make a claim for Savings Pension Credit. However, if they are a member of a couple and the younger one reaches State Pension age on or after 6 April 2016, they will not have access to Savings Pension Credit unless they have already been awarded it before this date and have remained continuously entitled to it since then.

No more Assessed Income Periods from April 2016

Assessed Income Periods were periods set by the Pension Service during which you did not need to report changes in your pensions, savings or investments, and your Pension Credit would not be reduced if your income or savings increase during your Assessed Income Period.

Since April 2016 no new Assessed Income Periods have been set and those which were already in place and which had been set for longer periods ended earlier.

This means people who get Pension Credit will need to report all changes in their circumstances that could affect their entitlement straight away.

New rules for people who go abroad for four weeks or more

If you go abroad, outside of Great Britain, and you do not intend to return within four weeks or you are not back home within four weeks, your Pension Credit (and Housing Benefit) will stop. There are exceptions – there is a 26-week limit for if you, your partner or dependent child are in hospital or undergoing medical treatment abroad and an 8-week limit if you are abroad due to the death of a close relative. If you go to Northern Ireland, this counts as abroad. When you go abroad you must expect to return home within the 4 (or 8 or 26) weeks and actually be back within that time period. These rules have applied since 28 July 2016.

Speak to our Money Advice team on 0161 331 2222 if you are unsure as they will be able to assist you to make sure that you are receiving all the benefits you are entitled to.

Alternatively, try our handy Benefit Calculator.

Personal Independence Payment (PIP)

What is PIP?

Personal Independence Payment (PIP) is a benefit paid to help people with some of the extra costs caused by long-term ill-health or a disability.

An award of Personal Independence Payment can dramatically increase your income – so if you or your partner or a child aged 16 or over have an illness or disability – whether physical, mental health or learning difficulty, contact our Money Advice team to see if you or they ought to claim.

Most people who are currently receiving Disability Living Allowance – except under 16s and those who were aged 65 on 8 April 2013 – are gradually being reassessed for Personal Independence Payment instead – see the Frequently Asked Questions. If you are currently getting Disability Living Allowance and are not sure if you are going to be affected by this change you can use this ‘checker’ https://www.gov.uk/pip-checker

Who can get Personal Independence Payment?

You can claim Personal Independence Payment if you have a long-term health condition or disability, are aged 16 or over, and under 65.

It doesn’t matter whether you are in or out of work and doesn’t take account of your income or savings.

Personal Independence Payment considers how your disability/health condition affects your ability to complete certain everyday activities. You will be asked to fill in a questionnaire and have to attend a medical assessment. If you score enough “points” from these you will be awarded Personal Independence Payment. See the Frequently Asked Questions for more information on these “points”.

Note: You might have a health problem but not consider yourself to be disabled. If your illness means that you need help, or take longer to do the task, or cannot do it reliably, repeatedly or safely, or you use aids and/or appliances to live a more independent live, then you may be able to claim Personal Independence Payment.

To be able to claim you will need to have had the problems that mean you qualify for Personal Independence Payment for a period of three months before making a claim, and be expected to continue to have these problems for a further nine months after making the claim. But these rules do not apply if you are terminally ill, or if you move onto Personal Independence Payment from Disability Living Allowance.

Parents of children under 16 can claim Disability Living Allowance for them instead.
If you are aged 65 or over you can claim Attendance Allowance instead.

How do I claim?

Claims are made over the telephone: 0800 917 2222. Lines are open 8am – 6pm Monday – Friday.

If you would prefer to complete a paper form just explain this when you call – but don’t delay completing and returning the form as an award will only be made from the date the DWP receive the form.

Once you’ve made this initial claim you will then be sent a questionnaire to complete about how your illness/disability affects you.

Most people who claim Personal Independence Payment will have to attend a face-to face consultation (medical) with a healthcare professional, although there are exceptions: E.g. for some people who are terminally ill.

The questionnaire and the medical are to work out how many points you score – so make sure you explain your problems and the support you need, as fully as possible.

Tax Credits

Working Tax Credits

What are Working Tax Credits?

Working Tax Credit (WTC) is designed to top up your earnings if you work. There have been a number of changes to the rules for qualifying for WTC and they are summarised below.

To qualify, couples with children must have one person working at least 24 hours per week. If both partners are working then they will need to work at least 24 hours between them and one of them must be working at least 16 hours

Working Tax Credit is no longer available to people aged 50 or over who are returning to work for 16 hours or more after being on benefits for at least six months. To qualify they will need to work at least 30 hours per week whilst the extra allowance already paid to people over 50 working 30 hours will stop.

Claimants need to report changes of circumstance immediately as backdating requests have been reduced from three months to one month. Drops in income of up to £2,500 per annum will be ignored and if the drop is more than this then the first £2,500 will be ignored.

There have also been alterations to the rules relating to increases in household income. Prior to April 2016 if the household income increased by up to £5,000 during the tax year this increase was ignored when calculating the WTC entitlement for that year. However since April 2016 any increase in income of more than £2,500 will be taken into account when calculating the WTC entitlement.

As Working Tax Credits are one of the benefits that are being replaced by Universal Credit, if you have a change in circumstances, it is likely you will need to start a new claim for UC. It is planned that by 2022, Working Tax Credits will be completely phased out in favour of Universal Credit.

Child Tax Credits

What are Child Tax Credits?

Child Tax Credit (CTC) is paid to help people with the costs of bringing up a child. There is no condition of being in work to qualify, although how much CTC is awarded is dependent on the household’s income and circumstances.

CTC is one of the six benefits that is being phased out and replaced by Universal Credit. This means that a person cannot claim tax credits and Universal Credit at the same time. If you are claiming CTC and you have a change in circumstances (such as a change in your income) you will be required to start a new claim for Universal Credit.

The Tax Credits helpline 0345 300 3900 assists with both new tax credits claims and allows existing claims to be updated.

Two Child Limit

On 6 April 2018, the Government introduced a two child limit into Housing Benefit, Child Tax Credit and Universal Credit. This does not affect entitlement to Child Benefit.

If you already have two or more dependent children in your family and you have a new baby, or you become responsible for another child, your Child Tax Credit or Universal Credit will only increase if that child is disabled and you get Disability Living Allowance for them and/or you have to pay for registered childcare for them, or if an ‘exception’ applies.

If you take on responsibility for a third, fourth, fifth etc. child and they were born after 6 April 2017, contact us for further advice.

Exceptions to the rules

There are some exceptions to the rules. In certain circumstances relating to multiple births, adoption, non-parental caring arrangements (e.g. kinship care and where a child was conceived as a result of non-consensual sex) extra money for a third, fourth, fifth etc. child could be included.

For example, if you have no dependent children but then gave birth to triplets, or if you already have one dependent child, then gave birth to twins you should receive extra Child Tax Credit, Housing Benefit for all those children. If you are an existing Universal Credit claimant, you will receive extra Universal Credit.

If you think an exception should apply, it will be up to the Tax Credit Office or Universal Credit Department to decide whether extra benefit can be paid for a third, fourth, fifth etc. child.

The Housing Benefit Office must follow the decision of the Tax Credit Office and, until the Housing Benefit Office has seen the Tax Credit award letter, they cannot include any extra child allowance for a third, fourth, fifth etc. child.

If you were already receiving Housing Benefit on 5 April 2017 and you had three or more children included in your Housing Benefit assessment, the Housing Benefit Office will continue to include these children in your award.

However, if you need to make a new claim for Housing Benefit or Universal Credit (e.g. if you move to a different local authority area) or you become responsible for another child, your Housing Benefit award can only include a maximum of two children (even if more than two of your children were born before 6 April 2017) until the Housing Benefit Office has seen your Child Tax Credit award.

So, unless you are getting Income Support, Income-Based Jobseeker’s Allowance or Income-Related Employment and Support Allowance (or Universal Credit and you are claiming Housing Benefit because you are living in specified accommodation), it is very important that you show the Housing Benefit Office your Tax Credit letter as soon as you receive it. If you delay, you could miss out on benefit.

As of 1 February 2019, anyone who makes a new claim for Universal Credit will only get a maximum of two child elements, unless any of the exceptions apply. There is, however, transitional protection for claimants who were already receiving child elements with an existing award for Universal Credit on 31 January 2019, or in a Child Tax Credit award in the previous 6 months. They will continue to receive child elements for the children who they were previously receiving elements or allowances for, until there is a break in the Universal Credit award or they are no longer responsible for the child.